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JaysRage (90.49)

Blood in the Chinese small cap streets? Or wait for fire sale prices?

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May 05, 2010 – Comments (5) | RELATED TICKERS: YONG , HOGS.DL

I've been following Chinese small caps for the past couple of years, and it has been a very lucrative area to invest in.  There a lot of wonderful things going on this investment category.    The economy has been in rampant growth, especially for inwardly looking industries and alternative energy.   It has opened up all sorts of opportunities for small companies to jump in and grow quickly.    In addition, the small caps that aren't included in index funds had opportunity for huge bursts upward when a good company got discovered through uplisting or additional analyst coverage.  

For the past two months, Chinese small caps have (as a sector) been getting crushed.   There is an overblown hypothesis that the entire Chinese economy is going to explode due to real estate overbuilding in the large cities.    EVERY Chinese small cap has taken a hair cut, not just the ones that had run too far.   There is a lot of quality in the bargain bin.  

Yet.....I just can't get myself to pull the trigger.   

I can't help but think they COULD go significantly lower.....there is fairly priced, bargain priced.........and then there is stupidly priced.     If possible, I think it's always a good idea to buy at stupidly low prices.  

I think a lot of really good Chinese small caps are now in the bargain level.    

 

5 Comments – Post Your Own

#1) On May 06, 2010 at 3:47 PM, gartersnk (58.46) wrote:

Why not buy in stages on the way down? If they bottom soon, at least you bought some, if they keep going down , buy more - dollar cost averaging seems to have worked well for me over the last couple years. Most every time I have tried to "time" the market and wait for a lower price I've missed it.  I try to keep a long term view and just keep buying the companies I've selected for the long haul. 

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#2) On May 07, 2010 at 5:36 PM, JaysRage (90.49) wrote:

That works for micro-movements.   For a macro-movement, which this has all the makings of, you will run out of money 1/3 to 1/2 of the way down, and you won't even break even until you are half way up the other side of the recovery.    Not only that, but you will likely burn your money on good companies as they become value plays, but when great companies reach value status, you will again be out of money.   

My list of value-plays is growing by the minute.   I spent some money on one of my favorites (LLEN).   I have some others that I'm looking at.   There are even some U.S. companies that are back in the value arena.   Some incredible values are out there.  Better and better companies are reaching fair value status and good companies are bargains all over the place.      

Next, I believe we will be looking at great companies as bargains and good companies at stupid levels.   That's what I'm looking forward to.  

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#3) On May 11, 2010 at 9:22 PM, blueberrygoo (69.74) wrote:

I'm pulling the trigger when PG hits $0.01.  That's if the exchange will allow me to partake in such bargains!

The markets are becoming a joke...  

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#4) On May 11, 2010 at 9:22 PM, MSUalum (91.97) wrote:

Agreed. I would stay away from trying to dollar cost average especially w/ chinese stocks. You almost always get burned. I think there are some good long term chinese value plays right now. My favorite is SUTR. Check it out and i think you will like what you see.

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#5) On May 12, 2010 at 2:27 PM, JaysRage (90.49) wrote:

I bought some LLEN when it dropped.   I bought and sold YONG for a 15% pop.    Right now, I'm mostly in cash.   I still have my LLEN shares, which I would double down if it goes below 9 again.    I'm familiar with SUTR.   I have it on my commodity watch list.   

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